Rajaratnam was convicted of five conspiracy counts and nine securities fraud charges at the closely watched trial in federal court in Manhattan. The jury had deliberated since April 25, and at one point was forced to start over again when one juror dropped out due to illness.

Prosecutors had alleged Rajaratnam made profits and avoided losses totaling more than $60 million from illegal tips. His Galleon Group funds, they said, became a multibillion-dollar success at the expense of ordinary stock investors who didn’t have advance notice of the earnings of public companies and of mergers and acquisitions.

Rajaratnam’s attorneys claimed his research and analysis methods were legitimate.

On Wednesday, Rajaratnam sat at the defense table, a rarity for trial, and stayed motionless as the verdict was read. He will remain free on bail, though now with electronic monitoring, at least until his July 29 sentencing.

The verdict came after seven weeks of testimony showcasing wiretaps of Rajaratnam wheeling and dealing behind the scenes with corrupt executives and consultants. Some of the people on the other end of the line pleaded guilty and agreed to take the witness stand against the Sri Lanka-born defendant.

Authorities said the 45 tapes used in the case represented the most extensive use to date of wiretaps — common in organized crimes and drug cases — in a white-collar case.

The defense had fought hard in pretrial hearings to keep the avalanche of audio evidence out of the trial by arguing the FBI obtained it with a faulty warrant. Once a judge allowed them in, prosecutors put the recordings to maximum use by repeatedly playing them for jurors.

“You heard the defendant commit his crimes time and time again in his own words,” Assistant U.S. Attorney Reed Brodsky said in closing arguments.

“The tapes show he didn’t believe the rules applied to him,” the prosecutor added. “Cheating became part of his business model.”

The wiretaps appeared to play prominently in the jurors’ deliberations: They asked to return to the courtroom countless times so they could listen to them again.

The defense argued that the tapes revealed nothing more than that Rajaratnam was doing his duty by asking questions about information already circulating in the “real world” of high finance.

“That happens every day on Wall Street,” he said. “There’s nothing wrong with it.”

John Dowd headed a team of attorneys who crowded around the defense table each day. The defendant took an uncustomary position on a bench behind them and listened along with jurors as his voice filled the courtroom.

In one July 29, 2008, call, Rajaratnam could be heard grilling former Goldman Sachs board member Rajat Gupta about whether the board had discussed acquiring a commercial bank or an insurance company.

“Have you heard anything along that line?” Rajaratnam asked Gupta.

“Yeah,” Gupta responded. “This was a big discussion at the board meeting.”

Prosecutors sought to maximize the impact of the Gupta tape by calling Goldman Sach’s chairman Lloyd Blankfein to testify that the phone call violated the investment bank’s confidentiality policies. Gupta, who has not been charged, has denied any wrongdoing.

The government also has played tapes of Rajaratnam it said proved he was trading secrets and orchestrating cover-ups with fellow hedge fund manager Danielle Chiesi, who has pleaded guilty in the case.

“I mean I think this stock could go up $10 you know? But we got to keep this radio silence,” Rajaratnam said in one tape.

“Oh please. That is my pleasure,” Chiesi responded.

“Not even to your little boyfriends, you know?”

“No, believe me, I don’t have friends,” she replied.

Rajaratnam advised Chiesi to buy 1 million shares of tech stock on an inside tip, then sell 500,000 of those shares — a tactic prosecutors say was used to throw regulators off the trail. In another instance, about 30 minutes of calls with an Intel tipster scored Rajaratnam a $2 million windfall on the computer chip-maker’s stock, prosecutors said.

Former financial consultant Anil Kumar testified that he and Rajaratnam — his former classmate at the University of Pennsylvania’s prestigious Wharton School — broke the law by speaking regularly about the negotiations over the acquisition of ATI Technologies Inc. by Kumar’s client, Advanced Micro Devices Inc., before the deal was announced.

“I told him that this was `red hot’ and shouldn’t be discussed,” Kumar said. Later, he said he cautioned the defendant, “This is going to be a complete shock to the industry … so treat this with the strictest of confidence.”

Prosecutors say Rajaratnam raked in $20 million by trading on his advance notice of the ATI-AMD deal. Afterward, he called Kumar at home and said, “You’re a star,” Kumar told the jury in federal court in Manhattan.

When Rajaratnam later informed Kumar that he would be rewarded with a $1 million kickback, “I almost fell off my chair,” the witness said.

The Galleon probe has resulted in more than two dozen arrests and 21 guilty pleas. It also has led to a second investigation aimed at consultants in the securities industry who pass off inside information as the product of legitimate research.

Only Rajaratnam has gone to trial and relived conversations that the insiders never suspected were being monitored. On one tape, Rajaratnam sounded sheepish when one particularly effusive tipster praised him for being a star in the hedge fund universe.

“The myth,” Rajaratnam said, “is larger than the reality.”

(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

Irene Cornell

Irene Cornell has been a reporter at WCBS for 40 years, and she still comes to work with a smile.
Irene covers crime and the courts -- name an interesting local case and she's probably covered it -- and she says what keeps the job so fascinating...

One Comment

Finally theese corrupt rat worshiping indians are getting caught for thier fraud. Now all the money he funelled into money was buisness in rochmond hill queens and now targeting forest hills queens and some parts of brooklyn must be reclaimed, all illegal Indians must be sent back to kiss a cows ass.

Sorry i made some typographical errors , probably cause this online news agency is run and controlled by the Indian monarchy. I meant to say richmond hill queens, i am mainly upset becuase my italian grandma found hundreds of rats in an apartment we rented to an indian family. Raj will love it in jail , he will find a rat to make friends with. on another note, i have made Tshirts depicting the indian goddess lakshmi on a models ass in a bikini .. if anyone wants one i sell them in the lower east side.. I dare any indian to try to sucker punch me for wearing it.

It’ unfortunate that this overweight convicted thief will probabaly never spend any time in prison. He certainly has plenty of money that will keep his lawyers living well as they keep him out of the can.

OK WE LOCKED UP THE BROWN GUY, WHAT ABOUT THE PEOPLE WHO LOOK LIKE CHENEY AND BUSH. THEY’RE STILL ON WALL STREET SUCKING UP ALL MY HARD EARNED MONEY, HAVING EXPENSIVE LUNCHES AND DRIVING FANCY CARS. WHAT ABOUT THEM???….LIVING ON THE UPPER WEST/EAST SIDE…THE HAMPTONS, WHILE JOHN Q HAS TO SUFFER TO THE HANDS OF THESE CRIMINALS!

I say throw this pig in jail in a hot smelly prison where they poop in the floor in his home country and let him rot there. I hate these arrogant dogs who think they can come over here and manipulate our American way and corrupt it and make oodles of dollars. I can’t imagine what it was like to actually work for the pig. Poor folks I hope they have good therapists.

My friend worked for him for a long time, apparently he was a really nice guy (why not, he’s one of the 10 richest people in America). Doesn’t mean I support his criminal actions, but he was not a bad guy to work for. He also paid VERY well.